Insights on Total and Permanent Disability Insurance

By Greg Dobrin August 16, 2017

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In this Advisr Experts Opinion, Greg Dobrin, of Sureserve Financial Services, discusses total and permanent disability insurance and a few general things to know when considering this type of insurance policy. Specifically, exploring the differences between TPD ‘any’ and TDP ‘own’.

Total and Permanent Disability (TPD) Insurance provides cover in the event a person can no longer work.TPD has two different definition types:

TPD ‘any’ where the insured can no longer perform any occupation.

TPD ‘own’ where the insured can no longer perform the occupation they are trained to do.

TPD ‘own’ will be more specific as a person may be trained to do one job, but could still perform another. TPD ‘own’ is useful where a person has trained or been educated for a specific job, such as:

A doctor

A lawyer

An accountant

A mechanic

An engineer

A scientist

In the event of an accident, a person may no longer be able to do the job they were trained to do BUT they could do another job (eg a doctor could do lecturing, a lawyer could do administration work etc).

TPD ‘any’ is fine to have held inside superannuation, because if a person can no longer perform ‘any’ occupation they will be effectively retired.

TPD ‘own’ is not suitable to be held inside superannuation as the insured could still work (in another field). As a result, it would not satisfy a condition of release from their superannuation. The money would remain inside the superannuation fund (and be of no use to the insured) until they meet a condition of release.While it sounds simple, there is more than meets the eye. Given the complexity of these issues, it is important to seek professional advice from a qualified financial planner for these matters.

Some insurers are now letting you have both OWN and ANY occupation in the one policy, where ANY sits inside super and OWN sits outside super. It is a clever solution which lets you have the best of both worlds – kind of like an insurance policy for an insurance policy!